LINDQUIST FORD, INC. v. Middleton Motors, Inc.

In the

United States Court of Appeals

For the Seventh Circuit

No. 09-3883

L INDQUIST F ORD , INC.,

S TEVEN L INDQUIST, and

C RAIG M ILLER,

Plaintiffs-Appellees,

v.

M IDDLETON M OTORS, INC.,

Defendant-Appellant.

Appeal from the United States District Court

for the Western District of Wisconsin.

No. 07-cv-12—Barbara B. Crabb, Judge.

A RGUED S EPTEMBER 28, 2010—D ECIDED S EPTEMBER 13, 2011

Before E ASTERBROOK, Chief Judge, and SYKES and

T INDER, Circuit Judges.

S YKES, Circuit Judge. In this successive appeal,

Middleton Motors, Inc., challenges the district court’s

liability and damages determinations in a second bench

trial following our decision in Lindquist Ford, Inc. v. Middle-

ton Motors, Inc., 557 F.3d 469 (7th Cir. 2009) (“Lindquist I”).

2 No. 09-3883

The underlying dispute involves a business deal gone

awry between two midwestern car dealerships. The

relationship began when Steven Lindquist and Craig

Miller of Lindquist Ford, Inc.,1 a successful Ford dealer-

ship in Iowa, offered to assist Middleton, a struggling

Ford dealership near Madison, Wisconsin. The parties

generally agreed that Miller, Lindquist’s general manager,

would provide management services to Middleton with

compensation to begin after he turned Middleton profit-

able and also that Lindquist would provide a capital

infusion in exchange for an ownership interest in Middle-

ton. Negotiations continued after Miller started working

at Middleton, but the parties never reached a more

specific agreement. The relationship broke down

11 months after Miller assumed general-management

responsibility at Middleton, largely because Lindquist

failed to come forward with the expected cash infusion.

Middleton showed Miller the door. Still not earning

a profit, Middleton did not pay Lindquist for Miller’s

services.

Lindquist sued Middleton to recover compensation

for Miller’s services. After a bench trial on unjust-enrich-

ment and quantum-meruit claims for relief, the district

court entered judgment for Lindquist on both claims.

Middleton appealed, and in Lindquist I we held that

the court had misconstrued the elements of quantum

1

We refer to plaintiffs Steven Lindquist, Craig Miller, and

Lindquist Ford, Inc., collectively as “Lindquist” unless the

context requires otherwise.

No. 09-3883 3

meruit under Wisconsin law, taken too narrow a view

of the equitable component of unjust enrichment,

and failed to consider important evidence as part of the

equitable balancing required for both causes of action.

We remanded for retrial. The court again entered judg-

ment for Lindquist for nearly identical damages. Middle-

ton appealed a second time.

We reverse. The court’s factual findings were

clearly erroneous. The court found that Middleton

became profitable during Miller’s tenure and that Middle-

ton fired Miller before he had a fair opportunity to

restore the dealership to profitability. Both proposi-

tions cannot be true. Apart from this internal incon-

sistency, the court’s findings are insufficiently sup-

ported by the evidence. The court’s damages determina-

tions were also flawed for the reasons identified in

Lindquist I.

I. Background

The facts are described in detail in Lindquist I;

we repeat only those necessary to the resolution of

this appeal. In 2002 Lindquist and Middleton opened

negotiations about how to revive Middleton’s financially

troubled Ford dealership. Middleton was co-owned by

brothers Dave, Robert, and Dan Hudson, and they had

explored relationships with other dealerships, including

the Geiger Group in Elkhorn, Wisconsin. Geiger had

the potential to invest money in Middleton but did not

have general-management capabilities of the sort that

Lindquist offered.

4 No. 09-3883

Negotiations became more serious in 2003. Perhaps

sensing that it might take months to iron out the

terms of their relationship, in March 2003 Lindquist and

Middleton signed a confidentiality agreement that also

contained a proviso that neither dealership would be

liable to the other in the absence of an executed written

agreement. On April 17, 2003, Steven Lindquist, Craig

Miller, and Lindquist’s accountant Carl Woodward

met with Dave Hudson, Robert Hudson, and Middle-

ton’s accountant Joe Schwarz to explore an arrange-

ment whereby Miller would provide management

services to Middleton in exchange for a percentage of

Middleton’s net profit. The Hudson brothers em-

phasized early in the meeting that their dealership also

needed a cash infusion, but the parties did not reach

agreement on this point. They did decide, however, that

Miller would immediately begin working as a general

manager at Middleton and Woodward would draft a

proposed management agreement. Miller took over

general management of Middleton on April 21 and

began implementing a long list of budget cuts. He

also identified goals for each department, began

weekly management meetings, and terminated several

employees. Miller continued as general manager of

Lindquist while also working at Middleton.

On June 2 Lindquist faxed a first draft of a proposed

agreement to the Hudson brothers. The draft agreement

provided that the “only compensation” for Miller’s man-

agement services would be “the Fee, the use of one

vehicle, and the reimbursement of travel, meals, and

lodging costs,” with the proposed “Fee” defined as 45% of

No. 09-3883 5

Middleton’s net profit. Under this proposal, payment of

the Fee would commence on the first day of the first

month that the dealership showed a net profit. Lindquist

also proposed a termination provision stating that if

Middleton terminated Miller’s services before January 1,

2005, Middleton would pay Lindquist the greater of

$350,000 or 50% of Middleton’s profits after payment

of a 15% management fee and the 45% Fee. The pro-

posal emphasized that Miller would have full authority

in running Middleton’s day-to-day operations. No men-

tion was made of a capital investment.

Schwarz responded on July 1 in an email containing

two attached memos (oddly dated July 2) reiterating

Middleton’s position that Lindquist needed to provide

cash. Schwarz explained that without a capital investment,

if . . . the changes made by [Miller] do not work, it

has weakened [Middleton’s] position further and

[Lindquist will] have put nothing at risk. Our original

understanding of a cash insertion, which is at risk,

gives [Middleton] greater comfort that [Miller] is at

the top of his game and is giving the priority effort

we need.

In a conference call later that month, Lindquist agreed

to make the cash infusion in exchange for an ownership

interest in the form of stock. Schwarz agreed to draft

a letter of understanding to this effect.

On August 28 Schwarz circulated a letter of under-

standing “for the relationship among the parties to be

legally formalized at a later point.” The letter provided

that the parties “have agreed to enter into an agree-

6 No. 09-3883

ment whereby [Lindquist] would provide a cash infu-

sion into [Middleton] and take over management of the

operations for the fees discussed below.” As Lindquist

and Middleton had understood all along, “the fees” were

to be based solely on a percentage of Middleton’s prof-

its. They included 15% of Middleton’s “real income” for

recoupment of time and expenses associated with the

assistance provided and 22.667% of the remaining “real

income” as compensation for management of Mid-

dleton’s operations, with payment to begin the first

month that Middleton reported a real-income profit. The

letter defined “real income” by reference to Generally

Accepted Accounting Principles (“GAAP”) income ad-

justed for last-in, first-out accounting (“LIFO”) and other

items. The proposed capital investment from Lindquist

was set at $500,000, in return for a 25% ownership in-

terest in Middleton. The termination provision proposed

in the letter of understanding differed from the one in

Lindquist’s June 2 proposal; it called for a termination

payment based exclusively on a percentage of Middle-

ton’s net profit and omitted the January 1, 2005 date.

More specifically, the termination language in the letter

of understanding proposed that if Middleton terminated

the parties’ relationship for good cause, Lindquist would

be entitled to 50% of profits for the succeeding 24 months

if profits were between $500,000 to $1,000,000, and for

36 months if profits exceeded $1,000,000.

Although negotiations continued over the next several

months, the parties never did reach a final written agree-

ment. In September 2003 Miller began working a half

day each week as president of yet another Ford dealer-

No. 09-3883 7

ship in Clinton, Iowa. Dave Hudson testified that he

grew increasingly frustrated in late 2003 and early 2004 as

the capital investment from Lindquist never came. On

March 24, 2004, with the dealership still sustaining

losses, Dave Hudson met with Miller and terminated the

parties’ relationship. He testified that this decision was

based primarily on Lindquist’s failure to provide the

contemplated cash investment, but also on concerns

about Miller’s management decisions and the losses

the dealership continued to experience.

On May 11 Miller wrote to Dave Hudson seeking com-

pensation for his services based on an estimate of Middle-

ton’s “adjusted profit.” Miller demanded $32,627.84,

which was his calculation of Middleton’s adjusted profit

during the last six months of 2003, as well as “50% of the

adjusted profits per the Letter of Understanding” for

2004 and 2005, and 50% of adjusted profits for 2006.

Along with his letter, Miller enclosed a handwritten

note showing Middleton’s losses for the last six months

of 2003 and then making certain unexplained adjust-

ments to arrive at an “adjusted profit” of $61,272.93,

which he multiplied by a “management company fee” of

53.25% to obtain the $32,627.84 figure.

Middleton refused to pay, primarily because Miller

had not turned the dealership profitable. Lindquist then

brought this suit for breach of contract, promissory

estoppel, quantum meruit, and unjust enrichment under

Wisconsin law. The district court entered summary

judgment for Middleton on Lindquist’s breach-of-contract

and promissory-estoppel claims, and the unjust-enrich-

8 No. 09-3883

ment and quantum-meruit claims proceeded to a bench

trial. The court found in Lindquist’s favor and awarded

damages in the amount of $160,000 plus prejudgment

interest. On postjudgment motions, the court vacated

the interest award and reduced the total judgment to

$152,332 to account for a $7,668 advance Middleton

had paid Lindquist in December 2003. Middleton

appealed, and in Lindquist I we reversed and remanded

with instructions to conduct a new trial applying the

correct legal framework and admitting evidence of the

parties’ negotiations, understandings, and conduct rele-

vant to the equitable balancing elements of unjust enrich-

ment and quantum meruit.

Retrial before the same district judge produced a

nearly identical judgment for Lindquist. On the unjust-

enrichment claim, the court made several key factual

findings to supports its conclusion that equity lies with

Lindquist. Specifically, the court found that: (1) pursuant

to the June 2 proposal, Lindquist expected that Miller

would have at least until January 1, 2005, to turn the

dealership around and would be entitled to compensation

if Middleton terminated the relationship before then;

(2) Lindquist believed it was protected by the provision

in the letter of understanding that the parties’ relation-

ship could be terminated only for “good cause”; (3) with

Miller in charge, Middleton posted “real income” in the

second half of 2003 and first quarter of 2004; (4) Middleton

terminated Miller’s services prematurely, just as many

of his strategies were beginning to show results;

(5) Middleton failed to give Miller full control over day-to-

day management of the dealership; (6) Middleton’s

No. 09-3883 9

primary goal was not a cash infusion but management

assistance; and (7) Middleton, not Lindquist, “dropped

the ball” on the subject of the capital investment. Lindquist

Ford, Inc. v. Middleton Motors, Inc., 665 F. Supp. 2d 1009,

1019-21 (W.D. Wis. 2009) (“Lindquist II”). Based on these

findings, the court held that Lindquist was equitably

entitled to be compensated for Miller’s services under

quantum meruit and unjust enrichment.

Regarding damages, the court noted that although

Lindquist I had explained the remedial difference

between quantum meruit and unjust enrichment, in this

case the analyses merged because “[w]hat a general man-

ager’s services are worth to a dealership is what they

would cost in the marketplace.” On this understanding

the court evaluated Lindquist’s damages based on the

average pay for general managers of car dealerships in

the region, arriving at a figure of $145,994.08 for

11 months plus benefits of $9,107.38, for a total of

$155,101.46. To this sum the court added $6,503.53 to

account for the amount Lindquist spent installing

a fiber optic T-1 data-line computer link, then sub-

tracted the $7,668 advance Middleton paid to Lindquist

in December 2003. The court entered final judgment

for Lindquist in the amount of $153,936.99.

II. Discussion

On an appeal from a judgment entered following a

bench trial, we review the district court’s legal conclu-

sions de novo, its factual findings for clear error, and its

decision to grant an equitable remedy for abuse of dis-

10 No. 09-3883

cretion. Lindquist I, 557 F.3d at 475. A factual finding

is clearly erroneous “ ‘when although there is evidence

to support it, the reviewing court on the entire evidence

is left with the definite and firm conviction that a

mistake has been committed.’ ” Platinum Tech., Inc. v. Fed.

Ins. Co., 282 F.3d 927, 931 (7th Cir. 2002) (quoting United

States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). As in

Lindquist I, Middleton takes issue with nearly every

aspect of the retrial. Middleton claims that the district

court: (1) misunderstood this court’s instructions in

Lindquist I and therefore erroneously assessed the par-

ties’ reasonable expectations; (2) erroneously credited

Miller’s testimony that Middleton was profitable in the

second half of 2003 and first quarter of 2004; (3) errone-

ously found that Miller had been denied a fair oppor-

tunity to turn Middleton profitable; and (4) failed to

follow this court’s instructions regarding damages.

A. Circuit Rule 36 and Automatic Reassignment on

Remand for a New Trial

Before proceeding, we note that once remanded for

a new trial, this case should have been assigned to a

different judge under Circuit Rule 36. See 7 TH C IR. R. 36 (A

case remanded for a new trial “shall be reassigned by

the district court for trial before a judge other than the

judge who heard the prior trial.” (emphasis added)). “The

purpose of Rule 36 is to avoid, on retrial after reversal,

any bias or mindset the judge may have developed

during the first trial.” Cange v. Stotler & Co., 913 F.2d 1204,

No. 09-3883 11

1208 (7th Cir. 1990). Reassignment is the default rule

when retrial is ordered and is intended to be automatic.

The only exceptions are when the remand order directs

that the same judge retry the case (ours did not) or the

parties jointly request that the same judge retry the

case. See 7 TH C IR. R. 36.

When we brought Rule 36 to the parties’ attention at

oral argument, both counsel seemed surprised. They

did say, however, that they never stipulated to retrial

before the same judge. This case should have been reas-

signed for retrial. Rule 36 is intended to head off suc-

cessive appeals of this very nature, in which the losing

party on retrial accuses the district court of neglecting

our remand instructions and conforming to its earlier

view of the case.

B. Liability Under Quantum Meruit and Unjust Enrich-

ment

As we explained in Lindquist I, quantum meruit and

unjust enrichment are quasi-contractual theories of relief

grounded in equitable principles. The elements of unjust

enrichment under Wisconsin law are: (1) a benefit con-

ferred by the plaintiff; (2) appreciation by the defendant

of the fact of such benefit; and (3) acceptance and

retention of the benefit under circumstances making it

inequitable for the defendant to retain it without pay-

ment. Seegers v. Sprague, 236 N.W.2d 227, 230 (Wis. 1975).

On the other hand, to succeed in a quantum-meruit

claim, the plaintiff must prove that: (1) the defendant

requested and accepted his services; and (2) the plaintiff

12 No. 09-3883

reasonably expected to be compensated for the services

rendered. Lindquist I, 557 F.3d at 478. Although the

quantum-meruit cause of action does not explicitly

contain an equitable element, we held in Lindquist I that

whether viewed as a part of the reasonableness require-

ment of the second element of the claim or as a third,

separate element, equity must lie with the plaintiff

before a quantum-meruit remedy may be ordered. Id.

Both causes of action thus share a common component

of equitable balancing, and in cases like this one where

there is ample evidence of the parties’ expectations,

deciding where equity lies must account for the parties’

negotiations, understandings, and course of conduct.

Id. at 478-80.

In Lindquist I we significantly narrowed the number

of issues the district court needed to resolve on re-

mand. We upheld the district court’s determinations

with respect to the first two elements of unjust enrich-

ment but held that the court had taken too narrow a

view of the equitable aspect of the claim. By asking

whether as a general matter equity permits an employer

to withhold payment for 11 months of services, the

district court failed to account for key evidence specific

to this case that sheds light on the parties’ negotiations,

understandings, and expectations. We also said that

the only lingering question under quantum-meruit

analysis was whether the evidence would establish

that Lindquist’s expectation of compensation for Miller’s

services was equitably reasonable. We then provided

a clear instruction to guide the analysis on remand:

No. 09-3883 13

If the court determines on remand that Lindquist

expected to be paid only if Miller turned Middleton

profitable and that Miller did not turn Middleton

profitable after a fair attempt, then the court should

enter judgment for Middleton under both quantum

meruit and unjust enrichment. If the facts are as

Middleton describes them, then Lindquist gambled

and lost on its bet. Equity requires that it internalize

the consequences.

Id. at 483.

This instruction is the focal point of this second ap-

peal. Based on our opinion in Lindquist I, there were

essentially three scenarios that might have produced a

win for Lindquist on retrial: (1) the evidence might

have shown that Lindquist reasonably expected to be

compensated for Miller’s services even if he did not

turn Middleton profitable; (2) the evidence might

have shown that Lindquist reasonably expected to be

compensated only if Miller turned Middleton profitable

and that he in fact did so; or (3) the evidence might have

shown that Lindquist reasonably expected to be com-

pensated only if Miller turned Middleton profitable

and that Middleton denied him a fair opportunity to do so.

The district court quickly ruled out the first scenario:

“As the court of appeals suspected, negotiations with

defendant proceeded on the basis that [Lindquist] would

earn no fees until and unless the dealership was showing

a profit.” Indeed, this particular finding was inevitable.

All of the evidence before the court—including the fee

provisions in Lindquist’s own proposal on June 2, 2003;

14 No. 09-3883

the August letter of understanding; and Miller’s May 11,

2004 letter demanding only a percentage of profits—

established without contradiction that Lindquist did not

expect to be paid for Miller’s management assistance

unless and until the dealership showed a profit. But

the court went on to confusingly frame the rest of its

analysis in terms of Lindquist’s and Miller’s compensa-

tion expectations. This was error. Having concluded

that Lindquist reasonably expected payment only if

Miller succeeded in returning Middleton to profit-

ability, no further analysis of the parties’ compensation

expectations was required.

Our review therefore narrows to the remaining two

possible scenarios under which Lindquist’s right to an

equitable remedy might have arisen. To repeat, the evi-

dence might have shown that Miller in fact returned

Middleton to profitability; or alternatively, the evi-

dence might have shown that Miller was fired before

he had a fair opportunity to do so. As a factual matter,

these are mutually exclusive propositions. But the

district court found both to be true. The court found

that “[u]sing the general idea of the adjustments contem-

plated by the parties in their letter of understanding . . .,

defendant became profitable by June 2003 and continued

to be profitable through March 2004”—the time frame

when Miller was on board. The court also found that

Miller’s “changes helped the dealership produce ‘real

income’ in 2003, that is, income adjusted to GAAP princi-

ples.” But the court also found that Middleton fired

Miller prematurely, without giving him a reasonable

No. 09-3883 15

chance to turn the dealership around, “frustrat[ing]

[Lindquist’s] ability to earn a fair fee.”

In light of the obvious tension in these findings, on

appeal Lindquist variously characterizes the dealership

as being on the “verge of profitability” when Middleton

ended the parties’ relationship. On the “verge of profit-

ability” is not the same as actually showing a profit;

the district court’s profitability finding lacked a sound

basis in the evidence. The only support for it was

Miller’s testimony and a “Supplemental Expert Report”

designating him as an expert witness (more about

this in a moment). Middleton’s financial statements con-

clusively established that Middleton was unprofitable

in 2003, 2004, and 2005—before, during, and after

Miller’s tenure. The only testimony by a Certified Public

Accountant came from Schwarz, Middleton’s accountant

and expert witness. He testified that Middleton’s 2003

“adjusted loss” or negative “real income” under GAAP

and accounting for LIFO was $171,000. And Lindquist

concedes on appeal that when Middleton terminated

Miller in March 2004, the dealership showed a year-to-

date loss of $29,477.

In the teeth of this uncontroverted evidence, the

district court’s reliance on Miller’s testimony and “expert”

report was unsupported. Miller is not a CPA, and his

report, which mostly addressed salaries for general

managers, did not identify any training or experience

that would qualify him to testify as an accounting ex-

pert. Lindquist had originally named Woodward as its

expert witness; he was the CPA who negotiated the

16 No. 09-3883

letter of understanding on its behalf, but Lindquist never

called him to testify. Miller’s report said only this about

Middleton’s profitability: “By March 2004, Middleton

Motors had already been profitable or was on the verge

of being profitable.” The evidentiary support for this one-

sentence conclusion consists of the six lines of hand-

written unsubstantiated calculations Miller included

with his May 11, 2004 letter and a spreadsheet with his

wholly unexplained adjustments to Middleton’s finan-

cial statements for April 2003.

Miller’s admissions on cross-examination were even

more problematic. The letter of understanding defines

“real income” as “GAAP income adjusted for LIFO adjust-

ments and other items.” On cross-examination Miller

admitted that although he purported to base his calcula-

tions on the letter’s definition, he did not know “what

GAAP is,” was “never . . . trained in how to determine

what is GAAP income,” did not “know what GAAP

standards say about depreciation,” and could not

identify the source of his $67,000 LIFO adjustment in

his handwritten calculations.

Accordingly, the court’s profitability finding cannot

stand. Based on the conclusive financial statements,

Schwarz’s testimony, Miller’s admitted lack of expertise,

the lack of evidentiary support for his “expert opinion,”

and the district court’s internally inconsistent factual

findings regarding the dealership’s profitability, it was

clear error for the court to find that Middleton produced

a profit with Miller at the helm in 2003 and early 2004.

See Platinum Tech., 282 F.3d at 931 (factual findings are

No. 09-3883 17

clearly erroneous when we are left with a “definite and

firm conviction that a mistake has been committed”

(quotation marks omitted)).

Lindquist argues that we can nonetheless uphold

the judgment based on the district court’s finding that

Middleton let Miller go before he had a fair oppor-

tunity to turn the dealership around. We explained in

Lindquist I that one of the equitable considerations for

the district court on remand with respect to both

the quantum-meruit and unjust-enrichment claims was

whether Middleton preempted Miller’s opportunity

to make a “fair attempt” at restoring Middleton to profit-

ability. 557 F.3d at 483. If Miller was ousted prematurely

or prevented from exercising meaningful control over

management decisions, then the district court might

properly conclude that the “circumstances [are] such that

it would be inequitable [for Middleton] to retain the

benefit [of his services] without payment” under unjust

enrichment, see Seegers, 236 N.W.2d at 230, or that equity

might lie with Lindquist for purposes of quantum

meruit, see Lindquist I, 557 F.3d at 478. Like the

court’s profitability determination, however, the district

court’s findings on this point lack a sufficient basis in

the evidence.

In determining that Miller was unfairly terminated

before he had a reasonable opportunity to turn the dealer-

ship profitable, the district court latched on to three

aspects of the parties’ negotiations. Most prominently, the

court emphasized that the termination language in

Lindquist’s June 2 proposal stated that if Middleton

18 No. 09-3883

ended the parties’ relationship prior to January 1, 2005,

Lindquist would receive a termination fee and specified

how the fee should be calculated. The court thought

that this language was evidence of the minimum

duration of the “fair opportunity” Miller should have

been given to turn Middleton around. In other words, the

court thought that Miller reasonably expected that he

would have at least that much time to do things his

way; termination before that date would give rise to an

equitable right to a quasi-contractual remedy. Second,

the court relied on the language in the letter of under-

standing regarding termination for good cause. Finally,

the court highlighted the provision in both the June 2

proposal and the letter of understanding emphasizing

that Miller would have free rein to put his management

policies into effect.

The termination provision from the June 2 proposal

might provide some support for the district court’s

fair-opportunity conclusion if viewed in isolation. But

in context, and considered in light of all the evidence,

it does not. The letter of understanding, which was cir-

culated approximately three months later, made no

mention of the January 1, 2005 date; in fact, it said

nothing at all about a contemplated time frame for

Miller’s effort. Indeed, the letter suggested only that if the

parties’ relationship was terminated, Lindquist would

be paid based on a percentage of the dealership’s profits.

This evidence echoes the prevailing understanding be-

tween the parties that compensation was expected only

if and when Miller’s efforts put the dealership in the

black. Finally, Miller’s May 11, 2004 letter implicitly

No. 09-3883 19

undermines the district court’s finding that Miller’s fair

opportunity to realize a profit extended to January 1, 2005.2

In the letter Miller does not specifically claim entitle-

ment to compensation based on a termination fee tied to

that date. Nor does he more generally claim that he

was entitled to a longer opportunity to implement his

changes.

The district court also relied on the “good cause” termi-

nation language in the letter of understanding, but this

evidence does not contribute much to the analysis of

whether Miller was given a fair opportunity to turn a

profit. Though the court made two factual findings

that might link this evidence to a conclusion that

Lindquist was entitled to an equitable remedy, both

findings lack sufficient support in the evidence. The first

2

Lindquist argues that this letter constituted a settlement

offer and should not be considered. See F ED . R. E VID . 408 (An

offer “to accept a valuable consideration in compromising or

attempting to compromise [a] claim” is not admissible on

behalf of a party when offered to provide liability for, invalidity

of, or the amount of a claim.). Lindquist waived this argu-

ment by not objecting to the letter’s admissibility on this basis

in the district court. F ED . R. E VID . 103(a)(1) (To preserve an

evidentiary objection for appeal, a party must make a “timely

objection or motion to strike . . . stating the specific ground of

objection, if the specific ground was not apparent from the

context.”); see also Jones v. Lincoln Elec. Co., 188 F.3d 709, 727 (7th

Cir. 1999) (“When a party fails to timely and properly object

at trial to the admission of evidence, the party is deemed to

have waived the issue on appeal.”).

20 No. 09-3883

was that Middleton fired Miller “just as many of his cost-

cutting and sales-boosting strategies were beginning to

show results.” Lindquist II, 665 F. Supp. 2d at 1020. The

only evidence to support this finding was Miller’s testi-

mony and report, and we have already explained why

it was error to credit this evidence. Second, the court

found that the primary cause for the breakdown in the

parties’ relationship—Lindquist’s failure to come for-

ward with the contemplated cash infusion—was really

Middleton’s fault. The court thought that Middleton’s

need for new capital was secondary to its need for man-

agement skills. This inference was based on a short line

of questioning at trial in which Dave Hudson testified

that Middleton had previously considered and rejected

an arrangement with Geiger Group, a Wisconsin dealer-

ship that might have been able to provide the needed

cash infusion but not a general manager. But Dave

Hudson did not emphasize the lack of a general man-

ager as the reason he ended negotiations with Geiger.

He explained instead that his discussions with Geiger

did not proceed beyond the preliminary stage because

he did not feel comfortable with Geiger’s people. Ac-

cordingly, his testimony does not support the court’s

finding that Middleton’s need for cash was secondary to

its need for management service. If anything, his testi-

mony establishes that Middleton’s capital and manage-

ment needs were equally important and that invest-

ment capital was central to its pursuit of a relationship

with another dealership.

The district court also emphasized that Lindquist’s

June 2 proposal made no mention of a cash-infusion

No. 09-3883 21

expectation. The negative inference the court appears to

have drawn does not prove very much, especially given

the abundant evidence both before and after the June 2

proposal establishing that Middleton’s need for cash

was always one of its principal concerns. Indeed, that the

June 2 proposal entirely omitted the subject was one of

the primary reasons Middleton rejected it. The subject

of a cash infusion was discussed at the April 17

meeting, and Schwarz’s July memos insisted that a

capital investment be added to the June 2 proposal

because of Middleton’s concern that Lindquist would

have nothing at risk when Miller implemented major

changes at the dealership. The August letter of under-

standing, written after Lindquist finally agreed to make

a capital investment in exchange for a 25% ownership

interest in Middleton, confirmed the importance of this

issue: “[Lindquist and Middleton] have agreed to enter

into an agreement whereby [Lindquist] would provide

a cash infusion into [Middleton] and take over manage-

ment of the operations . . . .” In short, the district court

erroneously downplayed the importance of a capital

investment as one of Middleton’s primary concerns.

The court also found that Middleton itself “dropped

the ball” on the subject of the cash infusion, but

this finding, too, lacks evidentiary support. The court

faulted Dave Hudson for never making a formal

demand on Lindquist, drafting a buy-sell agreement for

the sale of stock to Lindquist, or suggesting a time to

close the transaction. Nothing in the record suggests that

he was expected to take these steps; to the contrary, the

letter of understanding says only that “Steve Lindquist

22 No. 09-3883

and Craig Miller, as individuals, will invest a sum of

$500,000.” Moreover, as Schwarz testified, Miller had

substantially increased Middleton’s inventory, putting

the dealership at greater financial risk and substantially

increasing its cash shortage. This made the con-

templated capital investment even more important to

the success of the venture and validated that

Lindquist’s failure to come forward with the cash gave

Middleton cause to terminate the relationship. In the

end, the good-cause termination language in the

August letter of understanding simply cannot bear the

weight the district court gave it.

Finally, the district court found that Middleton did

not give Miller sufficient autonomy to run the dealership

and therefore deprived him of a fair opportunity to

restore it to profitability. This finding is in considerable

conflict with significant record evidence—much of it

cited in the court’s opinion—detailing the many changes

Miller implemented at the dealership. See Lindquist II,

665 F. Supp. 2d at 1014-16. To name a few: Miller negoti-

ated new insurance contracts, eliminated high bonus

plans for employees, implemented a new management

strategy, changed advertising agencies, increased the

amount of advertising, initiated weekly manager

meetings to discuss problems and sales goals, and hired

and fired employees. All this suggests ample control and

autonomy. In comparison, the areas on which Miller

complained that Middleton would not compromise—e.g.,

his suggestion that the dealership eliminate gourmet

cookies, hire an employee to clean the aquarium, handle

landscaping in-house, and spend less on an accoun-

No. 09-3883 23

tant—seem trivial. To the extent that Middleton refused

to implement these modest proposals, this evidence

is too insignificant to support the court’s finding that

Middleton denied Miller the authority he needed to

turn the dealership around.

In sum, the factual findings underlying the court’s

decision to impose a quasi-contractual remedy are insuf-

ficiently supported by the evidence. Because the judg-

ment is premised on clearly erroneous factual findings,

it must be reversed.

C. Damages

Because we are reversing the liability determination

based on clear error, we need not address the court’s

treatment of the question of damages. We note for com-

pleteness, however, that the court did not comply with

our remand instructions in Lindquist I. We explained

that if a quasi-contractual remedy was appropriate at all,

quantum-meruit recovery should be based on what

Miller’s services were worth in the marketplace, and

recovery for unjust-enrichment should be based on what

Middleton would have paid for a general manager in

Miller’s absence.3 Lindquist I, 557 F.3d at 477-78. Because

3

The measure of damages for unjust enrichment is limited to

the value of the benefit conferred on the defendant. Mgmt.

Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co., 557 N.W.2d 67,

79-80 (Wis. 1996). Quantum-meruit damages, on the other

(continued...)

24 No. 09-3883

it was undisputed that Miller managed more than one

dealership when he took over as general manager

at Middleton, we said that the damages inquiry on

remand should focus on how general managers are com-

pensated when they work for several dealerships at

once. Id. at 483. We also noted an open question about

whether general managers in the area are compensated

based in part on the dealership’s performance; we said

that the damages inquiry, if one was necessary, ought

to take this question into account. Id.

Yet the district court based its damages calculations

exclusively on “the average pay . . . for general managers

of dealerships in the region including Wisconsin,” plus

benefits. The court did not directly address how

managers are compensated when they work for several

dealerships at once—a potentially significant factor in

light of Miller’s testimony that because he was working

for other dealerships, he spent only 50% of his time on

matters relating to Middleton during the months

between September 2003 and March 2004. The court

also did not account for Middleton’s expert, who testified

that it is not uncommon for managers of multiple dealer-

ships to be compensated in part on a percent of profits.

The court did address compensation for managers in

failing dealerships, concluding, however, that Middle-

ton could not have attracted an experienced general

3

(...continued)

hand, are “measured by the reasonable value of the plaintiff’s

services.” Ramsey v. Ellis, 484 N.W.2d 331, 334 (Wis. 1992).

No. 09-3883 25

manager by offering a percentage of profits until the

dealership was successfully rehabilitated. This conclu-

sion is hard to reconcile with the fact that Miller him-

self—who had a salary from Lindquist—was willing to

assume the risk of no additional salary for the potential

reward of a large percentage of any net profit the dealer-

ship produced under his management.

III. Conclusion

For the foregoing reasons, we R EVERSE the judgment

below and R EMAND with instructions to enter judgment

for Middleton. There is one remaining loose end to tie

up. It is undisputed that Middleton advanced $7,668

to Lindquist and Lindquist paid $6,503.53 to install a

T-1 data line. These amounts nearly offset each other,

and Middleton asks that our remand include instruc-

tions to enter judgment in its favor for the difference.

Because Lindquist is not entitled to quasi-contractual

compensation for Miller’s services under either quantum

meruit or unjust enrichment, Middleton is correct that

it should recoup the $7,668 it advanced to Lindquist.

Middleton has conceded, however, that it must

repay the $6,503.53 expense Lindquist incurred to

install the T-1 line. This leaves a net recovery for

Middleton of $1,164.74. Judgment should be entered

accordingly.

9-13-11